Fed profiting off bailouts
By ALEXANDER BURNS | 08/31/09 6:23 AM
It's too early to tell whether the trend will last, but so far the Federal Reserve has turned a $14 billion profit on ...
emergency loans and investments designed to shore up the liquidity of the financial system, the Financial Times reports.
FT: "The internal estimate is based on the difference between the fees and interest on the lending facilities and the interest the Fed would have earned had it invested the funds in three-month Treasury bills.
"The central bank earned about $19bn in income from charging interest and fees to financial institutions and investors that tapped the new facilities to obtain much-needed funds during the turmoil. The interest the Fed would have earned by investing the same amount in T-bills was an estimated $5bn, leaving a $14bn gain since August 2007."
BUT: "The figure is not a complete picture of Fed finances as it excludes its company-specific bail-outs and purchases of long-term assets."